Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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Old Dominion Freight Line Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Return on Invested Capital (ROIC)
Old Dominion Freight Line Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2022 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrates a fluctuating but overall increasing trend over the observed period. Starting at 664,318 thousand US dollars in 2018, there is a dip in 2019 to 625,596 thousand US dollars, followed by a modest increase in 2020 to 635,624 thousand US dollars. Subsequently, there is a significant rise in 2021 reaching 1,069,664 thousand US dollars, which continues upward to the highest value across the timeframe in 2022 at 1,440,126 thousand US dollars. This indicates an improving profitability profile after a brief decline in 2019.
- Invested Capital
- The invested capital exhibits a general upward trend throughout the period. Starting at 3,056,198 thousand US dollars in 2018, it increases steadily to 3,453,801 thousand US dollars in 2019. Although a slight decrease occurs in 2020 to 3,423,416 thousand US dollars, invested capital rises again in the subsequent years to 3,881,401 thousand US dollars in 2021 and further to 4,117,551 thousand US dollars in 2022. This suggests ongoing investment and growth in the capital base despite minor declines in 2020.
- Return on Invested Capital (ROIC)
- The ROIC shows a variable but strongly positive trend over the five-year period. Initially, the ROIC stands at 21.74% in 2018, then declines to 18.11% in 2019 and modestly recovers to 18.57% in 2020. From 2020 onwards, there is a sharp and continuous increase, climbing to 27.56% in 2021 and reaching an impressive peak of 34.98% in 2022. This indicates a substantial improvement in capital efficiency and profitability relative to the invested capital in the recent two years, despite the earlier declines.
- Summary of Trends
- Overall, the data reveals that the company has enhanced its performance and efficiency over time, particularly notable in the last two years. After some downturns in 2019 and 2020, both profitability and returns on invested capital have significantly improved, accompanied by a consistent increase in invested capital. The substantial growth in NOPAT alongside rising ROIC demonstrates that the company has been able to generate higher returns on a growing base of invested capital, signaling strong operational management and effective deployment of resources. The positive trends in profitability and capital efficiency suggest a favorable outlook if such performance is sustained.
Decomposition of ROIC
Old Dominion Freight Line Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin shows a consistent upward trend from 20.2% in 2018 to 29.43% in 2022. After a slight decline in 2019 to 19.96%, the margin increased steadily each year, reaching its peak in 2022. This indicates improving operational efficiency and profitability over the period.
- Turnover of Capital (TO)
- The turnover of capital ratio experienced a decline from 1.32 in 2018 to 1.17 in 2020. However, it rebounded in the subsequent years, increasing to 1.35 in 2021 and further to 1.52 in 2022. This suggests an initial reduction in asset utilization efficiency followed by a notable improvement in capital use over the last two years.
- 1 – Effective Cash Tax Rate (CTR)
- The effective cash tax rate exhibited a downward move from 81.34% in 2018 to a low of 70.14% in 2020, implying a reduction in the tax burden during this period. However, it rose again in 2021 and 2022 to levels above 76%, indicating a partial reversal in this trend. The fluctuation suggests variability in tax management or changes in tax regulation impacting the company.
- Return on Invested Capital (ROIC)
- Return on invested capital decreased from 21.74% in 2018 to around 18% in 2019 and 2020, reflecting diminished returns during those years. Starting in 2021, ROIC improved substantially to 27.56%, and continued this upward trajectory to 34.98% by 2022. This signifies significantly enhanced efficiency and profitability in the use of invested capital toward the end of the period.
- Overall Financial Performance Trends
- The overall financial indicators suggest the company has strengthened its profitability and capital efficiency over the five-year span, despite some fluctuations in tax rate and capital turnover early on. The improvements in OPM and ROIC are particularly notable, highlighting successful operational and investment strategies driving higher returns by 2022.
Operating Profit Margin (OPM)
Old Dominion Freight Line Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenue from operations | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
OPM = 100 × NOPBT ÷ Revenue from operations
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The data indicates a consistent increase in net operating profit before taxes over the analyzed periods. Starting from approximately 817 million US dollars in 2018, there was a slight increase in 2019 to around 820 million. A more notable rise occurred in 2020, reaching approximately 906 million. This upward trend accelerated significantly in the subsequent years, with NOPBT reaching about 1.39 billion in 2021 and further increasing to roughly 1.84 billion by the end of 2022.
- Revenue from operations
- Revenue exhibited a generally positive trajectory with some fluctuations. Initially, revenue was approximately 4.04 billion US dollars in 2018, increasing slightly to about 4.11 billion in 2019. However, in 2020, revenue declined marginally to nearly 4.02 billion, possibly influenced by external or market factors during that period. From 2020 onwards, there was a substantial increase, climbing to around 5.26 billion in 2021 and further rising to approximately 6.26 billion in 2022, reflecting strong growth in operational activities.
- Operating profit margin (OPM)
- The operating profit margin demonstrates a clear upward trend throughout the period under review. Starting at 20.2% in 2018, it slightly decreased to 19.96% in 2019. From 2020 onwards, the margin improved markedly, rising to 22.57%, then increasing further to 26.53% in 2021, and reaching 29.43% in 2022. This pattern reflects enhanced operational efficiency or improved cost management effectively increasing profitability relative to revenue.
Turnover of Capital (TO)
Old Dominion Freight Line Inc., TO calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue from operations | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Invested capital. See details »
2 2022 Calculation
TO = Revenue from operations ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Revenue from operations
- The revenue exhibited a generally upward trajectory over the five-year period. Starting at approximately 4.04 billion in 2018, it experienced a slight increase in 2019, followed by a marginal decline in 2020. However, there was a significant surge in 2021, with revenues reaching over 5.25 billion, and this upward momentum continued into 2022, culminating in a revenue figure exceeding 6.26 billion.
- Invested capital
- Invested capital increased steadily throughout the period. From around 3.06 billion in 2018, it rose to about 3.45 billion in 2019, showed a slight decrease in 2020, and then resumed growth in the subsequent years. By 2022, invested capital had reached approximately 4.12 billion, which suggests ongoing investment in assets and resources aligned with the company’s growth in operations.
- Turnover of capital (TO)
- The turnover of capital ratio, reflecting the efficiency of using invested capital to generate revenue, declined from 1.32 in 2018 to approximately 1.17 in 2020. This decline could indicate a less efficient use of capital during that period, which coincides with the dip in revenue in 2020. From 2021 onward, the ratio improved significantly, reaching 1.35 and then further increasing to 1.52 in 2022. This improvement in turnover signifies a more effective utilization of invested capital to drive revenue growth in the latter years.
Effective Cash Tax Rate (CTR)
Old Dominion Freight Line Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes consistently increased each year from 2018 through 2022. Starting at $152.35 million in 2018, the figure rose progressively to $194.49 million in 2019 and then sharply increased to $270.59 million in 2020. The upward trend continued with a rise to $324.73 million in 2021 and peaked at $402.27 million in 2022, indicating a substantial growth in the absolute tax payments over the five-year period.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited a steady growth trajectory across the observed years. From $816.67 million in 2018, it marginally increased to $820.09 million in 2019, followed by a more pronounced increase to $906.21 million in 2020. The profit showed a significant surge in 2021, reaching $1.39 billion, and further escalated to $1.84 billion in 2022, reflecting strong operational performance and profitability improvement over time.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrated variability throughout the period. Initially, it increased from 18.66% in 2018 to a peak of 29.86% in 2020. Subsequently, the rate declined to 23.29% in 2021 and further decreased to 21.83% in 2022. This pattern suggests that although the absolute cash tax payments rose, the proportion of tax relative to operating profit fluctuated, with a notable decrease in the latter years, potentially due to tax planning strategies or changes in tax legislation.
- Overall Analysis
- The data indicates robust growth in operating profitability accompanied by increasing cash tax payments. Despite rising profits and taxes paid, the effective tax rate did not follow a linear upward trend, showing some reduction after 2020. This could signal improved tax efficiency or structural changes in tax obligations. The combination of increasing net operating profit and substantial tax payments underscores strong operational gains supporting a higher tax base, while the declining tax rate percentage towards the end of the period may imply strategic financial or tax management efforts.